Sony plunged $10 billion after its PS5 sales cut. But a bigger issue is its near decade low games margin

[MeachTheMonster]

Sony plunged $10 billion after its PS5 sales cut. But a bigger issue is its near decade low games margin

Around $10 billion of value was wiped off Sony's stock this week after it cut its sales forecast for its flagship PlayStation 5 console for the fiscal year.

www.cnbc.com

The shipment forecast cut for PS5 ... is not what is disappointing ... What is disappointing is the low level” of operating margin, Atul Goyal, equity analyst at Jefferies, said in a note to clients on Wednesday.

Their rev (revenue) on digital sales, add-on-content, digital-downloads are at all time highs… And yet their margins are at decade-lows. This is just not acceptable,” Goyal said in an email to CNBC.

Goyal qualified that the current margin for Sony’s gaming business is “almost near decade lows.”

But xbox tho

 

[Rice N Beans]

Dunno if mods just want more reporting or something, but this surge of thread pollution from both camps needs to be nipped.

 

[winb83]

Dunno if mods just want more reporting or something, but this surge of thread pollution from both camps needs to be nipped.

He already made a thread on the state of the industry. This should have been posted in there.

https://www.thecoli.com/threads/game-over-industry-suffers-slowdown-after-decades-long-winning-streak.1019544/unread

 

[MeachTheMonster]

Dunno if mods just want more reporting or something, but this surge of thread pollution from both camps needs to be nipped.

He already made a thread on the state of the industry. This should have been posted in there.

https://www.thecoli.com/threads/game-over-industry-suffers-slowdown-after-decades-long-winning-streak.1019544/unread

Winb i thought you were very much interested in single digit margins just yesterday


Sony stan’s

 

[Rice N Beans]

He already made a thread on the state of the industry. This should have been posted in there.

https://www.thecoli.com/threads/game-over-industry-suffers-slowdown-after-decades-long-winning-streak.1019544/unread

Yeah, and there's another thread circling around AAA budgets and whatever hurting said margins.

 

[O³ (O cubed)]

And people ask me why I made the thread, The Arcadium is in Shambles.

 

[winb83]

Winb i thought you were very much interested in single digit margins just yesterday


Sony stan’s

The path Sony is on is unsustainable. They need to make drastic changes to preserve their business because if their profit margins shrink much further there won't be any.

See I can openly admit Sony has issues. Where is your admission that Xbox is facing even worse problems? As bad as it is for Sony they aren't looking at Nintendo and Microsoft and going maybe we can put our games there.

 

[Grand Conde]

It's a pretty good article, and explains the focus on GAAS in a background of ever rising operating costs and stagnant console growth. Helldivers 2 is a good start but they need Concord to continue the momentum. Repeated GAAS successes, even if they aren't mammoth successes like Fortnite, would help.

Realistically this is bad news for first party studios where layoffs and closures are definitely incoming. Also bad news for consumers as they aren't cutting hardware prices. Definitely needs to be focus shorter campaigns with wider gameplay systems - I think the PS core audience will accept this if the quality is still there.

And I'm calling day and date SP games on PC by the end of gen. At least for some games.

 

[winb83]

All the people that lectured me about subscription services being unsustainable where are you as Sony continues on its chosen path and it's profit margins shrink and shrink?

Y'all beat your chest about player count numbers and series selling 50 millions and it's all a bunch of noise adding up to them making less and less money as time progresses.

If subscription services are so bad and their current model is so good why are their margins shrinking not growing? Seems as if this path is just as unsustainable as yall claim subscription service's are.

 

[MeachTheMonster]

The path Sony is on is unsustainable. They need to make drastic changes to preserve their business because if their profit margins shrink much further there won't be any.

See I can openly admit Sony has issues. Where is your admission that Xbox is facing even worse problems? As bad as it is for Sony they aren't looking at Nintendo and Microsoft and going maybe we can put our games there.

This is sony stan bubble talk.

The company with the most money, that makes the most revenue, at higher profit margins, and is best positioned for the future has “worse problems” cause they stepped away from the console war

 

[winb83]

This is sony stan bubble talk.

The company with the most money, that makes the most revenue, at higher profit margins, and is best positioned for the future has “worse problems” cause they stepped away from the console war

That's how you choose to spin it? They stepped away from the cosole war? Some of those games underperformed because they don't have the audience to support them or they reached the limit of their initial success so they're being ported to platforms with a much higher audience count to see if they can make more.

This wasn't a choice they made back in the Xbox 360 days when they were far more successful. It's not a coincidence that their console sales are the worst they've been in the last several generations and now this happens.

 

[Instant Classic]

It's a pretty good article, and explains the focus on GAAS in a background of ever rising operating costs and stagnant console growth. Helldivers 2 is a good start but they need Concord to continue the momentum. Repeated GAAS successes, even if they aren't mammoth successes like Fortnite, would help.

Realistically this is bad news for first party studios where layoffs and closures are definitely incoming. Also bad news for consumers as they aren't cutting hardware prices. Definitely needs to be focus shorter campaigns with wider gameplay systems - I think the PS core audience will accept this if the quality is still there.

And I'm calling day and date SP games on PC by the end of gen. At least for some games.

Didn't the Insomniac leak say layoffs were coming?

I do agree that day and date PC games will happen by the end of this gen. I am in the camp that it only helps Sony because I don't think people will move to PC due to games being on PC. Right now the pc market is fukked with high cost of building a compentent PC and people like consoles for the ease of use. I feel if they want to sustain production they'll need to release games on PC day and date

 

[daze23]

kinda goes back to what Jim Ryan said about needing games like COD to support their first party games

Helldivers is off to a good start, but it's real success depends on the long term success of it's monetization, and if they can keep players engaging with it

 

[The Mad Titan]

Sony Stan's were on my case about exclusive triple A 1st party games being so key to winning the console war narrative.

I'ma go ahead say it again and for the foreseeable future.


Looks like I was right again.


Unless you are Nintendo 1st party games ain't were the money is at, selling hardware ain't were the money is at. And making all the quarter billion triple A games at a time when gaming (really everything) is the most expensive its ever been is slow poison.

 

[The Mad Titan]

Also congratulations Stans,

PlayStation is in 1st place when it comes to hardware sales (according to stans) but last place when it comes to profitablity and sustainability.


Meanwhile Nintendo is the richest company in Japan and MS gaming is profitable sustainable and they have started making the adjustments needed to keep it that way.